Nintendo of America is undergoing significant changes in its testing department amidst a reported slowdown in game development and the apparent delay of the Switch 2.

According to a report by Kotaku, Nintendo has confirmed a restructuring of its internal testing, involving the termination of some contractor assignments and the creation of new full-time employee positions.

Nintendo ADR (OTC:NTDOY) stated: "For all assignments that are ending, the contractors' agencies, with [Nintendo of America's] support, will offer severance packages and provide assistance during their transition."

"For those contractor associates who will be leaving us, we are tremendously grateful for the important contributions they've made to our business, and we extend our heartfelt thanks for their hard work and service to Nintendo," the Japanese company added.

Contractors suggest that Nintendo is experiencing a "lull" in its testing department due to the absence of major first-party game releases on the horizon and a lack of hands-on testing for the upcoming Switch successor, initially rumored for a late 2024 release.

While the exact number of affected employees remains undisclosed, sources suggest that over 100 workers may be impacted, with those transitioning to full-time roles being redirected away from software testing.

Nintendo's restructuring follows a trend of industry-wide layoffs, with competitors like Sony Group Corp. (NYSE:SONY) and Microsoft Corp (NASDAQ:MSFT) also experiencing significant staff reductions. Microsoft recently laid off 1,900 employees following its acquisition of Activision Blizzard, while Sony cut approximately 900 jobs, affecting developers from studios like Insomniac, Naughty Dog, and Guerrilla.

Despite these challenges, Nintendo has released titles like Princess Peach Showtime and announced plans for a remaster of Paper Mario: The Thousand-Year Door. However, the company's testing department changes suggest internal adjustments amid broader industry shifts.

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